• BUY Entry – 1.13 Target – 1.30 Stop Loss – 1.06
  • RFMD is both a reopening play and a Covid-19 play. The medical group was appointed as a provider of air border screening, swabbing of foreign workers including incoming air travelers, as well as guests at public events. In addition, RFMD currently has four dedicated vaccination centres. 
  • Reopening play. The medical group stands to benefit as a reopening play when borders are reopened and more travel is allowed. It could also branch out into other complementary services such as serology-related tests. Test related services is a relatively high margin business which could contribute meaningfully to its bottom line. 
  • China’s growth. RFMD’s China operations also look to pick up pace this year. The group recently partnered with a subsidiary of China Life Insurance to boost collaborations in China’s healthcare market. RFMD completed the Raffles Hospital Chongqing in 2019, the Raffles Hospital Beijing in 2021, and it expects to inaugurate another tertiary hospital in Shanghai this year. 
  • Valuations. While valuations are on the high side of 35x FY2021 P/E and 32x FY2022 P/E, we expect further upside potential based on stronger-than-expected earnings growth from its Singapore and China operations. Consensus has 8 BUYS / 2 HOLDS / 0 SELLS and an average 12-month target price of S$1.35 (+17% upside potential). 
RFMD SP (Source: Bloomberg)